Sir Fred Goodwin shredded by ABN takeover

It would be trite to say that Fred has been shredded but the expected
resignation of Sir Fred Goodwin as Chief Executive is the management price
the Royal Bank of Scotland has had to pay to be “nationalised”.

For the chop: Sir Fred Goodwin is expected to resign as chief executive of RBSPhoto: PA

There are other costs of course, not least a compensation package that should help Sir Fred indulge in his hobby of restoring cars (he likes the Ferrari brand) and playing golf (Jack Nicklaus is one of his friends) if he goes.

But the charismatic and arguably the most abrasive executive in British banking is unlikely to be in the growing queue of jobless bankers long enough to get his hands dirty or his handicap more respectable. He is, after all, only 50.

Sir Fred may have earned the sobriquet “Fred the Shred” by swinging the axe after acquisitions but his ability and performance have earned him a top spot among the international banking set. He was instrumental in turning RBS from a cosy, comfortable regional bank into one of the world’s biggest. He was also instrumental in sowing the seeds that have led to RBS being bailed out by the taxpayer.

He paid too much for ABN Amro – a lion’s share of the £48bn cost to the consortium taking over the Dutch bank – and, by failing to achieve a better balance between capital and assets, left RBS under-capitalised and vulnerable to a banking crisis that has needed Government intervention. “He has run the bank far too close to the bone,” said one long-time RBS pundit.

He is passionate about banking and RBS and his grasp of finance is in the Alpha class. He is equally passionate about detail. He had his own on-site Portacabin at Goggaburn during the construction of a new HQ outside Edinburgh and involved himself right down to the choice of wallpaper.

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Ambition has also driven the former Paisley grammar school boy, just one of the characteristics he shares with Gordon Brown. Their Scottish backgrounds are similar with Goodwin taking the high road into finance, via law studies at Glasgow University, and Brown the low road to No 10. Their paths have crossed frequently and Goodwin was a welcome visitor to No 11 when Brown was Chancellor.

At the age of 29 Goodwin had achieved “young Turk” status at Touche Ross where he was partner, itching for a bigger challenge and opportunity.

He led the team handling the messy liquidation of the Bank of Credit and Commerce International and ended up moving into banking in 1996 as chief executive of Clydesdale, the Scottish retail bank.

Enter “Fred the Shred”. He wasted little time in making Clydesdale sharper and fitter and found himself head-hunted by RBS, three years later for the post of deputy chief executive. Goodwin now had the platform to move RBS up the banking league table.

Sleepy National Westminster offered 'promotion’ at a stroke and although three times bigger than RBS was no match for the Goodwin treatment.

He drove the £10bn takeover of NatWest and by 2000 was firmly in the chief executive’s chair. Fred was ruthless with his shredding — culling 18,000 jobs and ended up in the eyes of Forbes, the US business magazine, as businessman of the year for a “brilliantly strategised hostile takeover.”

Goodwin became a “hot property” and, through acquisitions and aggression, wasted little time in turning RBS from a regional to a global player. With size came clout and a touch of arrogance and strained relations with the City

ABN Amro has represented the high point and the low point in the Goodwin career. He persisted with the deal as the financial storm clouds began to gather, earning a £4m pay packet for his efforts. But by overstretching the balance sheet and forcing RBS to mount a £12bn rights issue he has put RBS under Whitehall control.